Nonprofit Financial Leaders: Donations, Dues, and Don’ts

Finance challenges in the nonprofit world are a different animal than what you see in the private sector. Preparing financial statements, tax returns, and grant applications can be jarring if you aren’t prepared for the shifts needed to make a smooth transition.

Forming and executing the group’s strategic vision can be equally challenging. A nonprofit organization can be anything from a single-person initiative to a global organization with thousands of locations.

Rather than working toward earning the highest profit possible, the primary goal of a nonprofit is to serve their constituents and their mission. But that doesn’t make managing their books and budgets any easier. 

Sustainability and keeping an eye on cash flow are just some of the fundamental responsibilities that nonprofit financial professionals take on.

Managing the money

Once you pass the hurdle of acquiring funding (a whole other matter), the real work begins.

Projecting donations

Business directors at nonprofits have to look into their crystal balls, just as their counterparts in the corporate world do. You have to anticipate the types and volume of monies, trusts, and property coming through the door when there is little or no control on whether they’ll come to fruition.

What if planning

Making assumptions about the economy, incoming funds, and the needs of the beneficiaries is an imperfect science. With people depending on the organization, scenario planning is imperative.

Multiple income streams

Fundraising events, physical product sales, and real-estate endowments are only a few of the ways that nonprofits get the money they need to provide their services. Annuities, securities, and even life insurance gifts can require unique knowledge to properly manage, convert, and utilize their distributions.

Restricted donations and grants

Forecasting, tracking and non-profit reporting on monies that are earmarked for specific use is quite a job. Managing and documenting the income and outflows for government or private grant programs takes serious attention to detail.

Text to give

In 2010, the Red Cross raised $43 million to aid victims of the devastating Haiti earthquake. Amazingly, it was done through modest $10 donations by people sending a text of the word ‘Haiti’. Innovative fundraising methods spread awareness of the group’s needs to the public while securing the monies they need to aid others.

Bitcoin

The adoption of bitcoin donations by the nonprofit world is adding yet another dimension to their funding portfolios. From United Way to global water purification projects, accepting bitcoin is attracting both new donors and public interest, raising the profiles of the organizations while securing funding and additional advocates.

Education never stops

There’s a continual need to educate individuals about the financial aspects of nonprofits. Sharing your knowledge on everything from keying in transactions, to reading financial statements, to explaining metrics and reserve requirements needs to be done often.

Staff and volunteers

Employment at nonprofits is a growing sector in the economy, but the team you work with can sometimes have little or no accounting experience, let alone accounting experience within a nonprofit. Adjusting from the financial requirements in the corporate world can be coupled with an unexpected high turnover level.

Operational leaders

Depending on the size and function of the group, a managerial team might handle the day to day activity. Their skill sets might not include an understanding of nonprofit accounting.

Branches and chapters

Working with a nonprofit, similar to a business, could include working at the headquarters of the group or within a local chapter or regional branch. If you’ve been active in a professional association, you know that leadership and other volunteer positions can be transient. When people get overwhelmed with obligations, volunteer work is often the first area impacted.

Board members

People holding board positions are passionate about the mission of the nonprofit, but they’re more likely to come to the board without the business experience or education than you would find in private industry. Enlightening them to their fiduciary responsibilities aids the organization and enhances the board members’ abilities to better serve the nonprofit.

Foundation for success

Nonprofit work itself is very fulfilling. You may be surprised at how much bringing your accounting and financial skills is appreciated. Whether choosing nonprofit work for your professional career or through volunteering with fundraising, board or treasury activities, financial expertise can play a big part in keeping nonprofits viable and able to focus on their missions.

Centage simplifies the budgeting and forecasting process for nonprofits. Easily accommodate the unique aspects of your organization, like budgeting deferred revenue for services, budgeting payroll by individual, or allocating expenses/funding by project. Quickly generate reports for investors at whatever level of granularity they require. Book a demo today.